- Increasing number of first-time directors entering market with less capital
- One in 13 directors lives in social housing
Nottingham, UK, 9-12-2014 — /EuropaWire/ — The number of first-time business directors in the UK is at an all-time high, according to Experian data. Alongside a lower level of business experience, these ‘Debut Directors’ start-up with less investment than ever before and an increasing proportion come from backgrounds with lower than average levels of affluence.
More than half a million businesses were created in the UK last year (515,000 in 2013, up 8.9% from 473,000 in 2012), with the proportion of first-time directors rising by 12.6% (304,000 in 2013 compared to 270,000 in 2012). A Debut Director is an individual listed as a company director for the first time.
First-time directors in 2013 have less start-up capital and come from a lower affluence band when comparing these individuals’ incomes, property values and net worth to national averages.
Survival of the fittest
The positive story for UK start-ups and the UK economy doesn’t stop there, with business survival rates also on the up year-on-year, from 76 per cent in 2009, to 87 per cent in 2011. The survival rate measures businesses still trading two years after start-up, observing companies which have survived up to the end of 2013. Overall, those less affluent Debut Directors have a slightly lower chance of survival (84 per cent compared to 87 per cent survival rate in 2011), but a savvy approach to business and credit management can increase those chances significantly.
Max Firth, Managing Director for Experian Business Information Services, UK&I, said: “These figures suggest a shift in how we should view the average UK entrepreneur. It’s not all high-tech start-ups and Dragons’ Den-style big ideas. An increasing proportion of new business directors are making the most of the lower start-up entry levels; grabbing a mobile phone, a laptop and a flexible workplace, and creating their own jobs and their own opportunities.
“While this increasing population of Debut Directors should be celebrated, there’s much they can do to improve their chances of success. Some may still lack the experience, capital and contacts needed to survive those first few tricky years. So it’s crucial for young entrepreneurs to tap into business support networks for advice and they shouldn’t underestimate the value in partnering with a more experienced director if they can. Just as crucially, they need be aware of how others may see their business and the impact this could have on their access to essential services and potential funding opportunities.”
Advice for Debut Directors:
- You don’t have to go it alone: It may be advisable to try to find a partnering director, especially if you are able to partner with someone who has previously experienced start-up success to act as a mentor. Experian analysis shows businesses started by two people or more have a greater chance of survival.
- Know your sector: There are many successful firms even in vulnerable sectors, just as there are many companies in growing sectors that do not perform well. The key is to ensure you have a good understanding of the risks and challenges of the target sector.
- Know your area: Make sure there is local demand for the service or product if targeting a specific region.
- Investigate all available finance options: Don’t just rely on overdrafts, bank loans or personal sources of cash. Investigate alternative sources of finance, such as crowd funding, angel investments, business cash advances and government grants.
- Get credit savvy from the start: Ensure your business is registered with a business directory and approach credit reference agencies proactively to make sure your credit line is in order before you start making purchases. This will help kick-start your credit history and put you in a better position to negotiate with initial suppliers (e.g. telephone, utilities, banking).
- Check your suppliers and customers: It’s easy to get caught up in that first customer win and forget the due diligence. Be sure to check out the financial position of all your customers and suppliers, regardless of how big they are. Don’t wait until they become insolvent and you don’t get paid.
- Don’t stop sharing business information: Regardless of the stage a business is at in its development, the more information there is in the public domain or that is provided to credit reference agencies, the better. Once you are on top of it, you will be able to spot any problems early on, as opposed to them taking you by surprise and scuppering critical business developments further down the line.
Follow us on Twitter @ExperianSME_UK for #2014BizTips, our latest news, views and insight.
T: 44 (0) 115 992 2645 | M: 44 (0) 7583 085796
The latest analysis has been compiled using some of the most comprehensive business data on the market. This data powers BusinessIQ, a new easy-to-use, integrated online platform that enables credit professionals to accurately and efficiently manage its business customers and all the risks and opportunities associated with them – from acquisition stage and throughout the life cycle of the relationship. This includes giving firms an early warning system on customers who might be getting into financial difficulty.
We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score, and protect against identity theft. In 2014, we were named by Forbes Magazine as one of the ‘World’s Most Innovative Companies’.
We employ approximately 16,000 people in 39 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2014, was US$4.8 billion.
To find out more about our company, please visit http://www.experianplc.com.